Entrepreneurs worried about surviving tariffs

The International Monetary Fund projects sluggish growth for the U.S. economy this year due to an escalating trade war, reinforcing economists’ warnings about the negative repercussions of President Trump’s tariffs.

“We are entering a new era,” Pierre-Olivier Gourinchas, chief economist at the IMF, said. “This global economic system that has operated for the last eighty years is being reset.”

The U.S. economy will grow 1.8% this year, the IMF said in its World Economic Outlook, down 0.9% from January and a full percentage point from last year’s projection of 2.8%. Growth for 2026 is expected to be slightly lower at 1.7%. The international financial institution does not expect the U.S. to dip into a recession, but said the odds now have risen from 25% to 37%.

The IMF also slashed the growth forecast for the global economy to 2.8% this year, down from 3.3% in January.

The organization does not expect the U.S. to enter a recession in 2025, but said the odds have now risen from 25% as of October 2024 to 37%. The likelihood of a global recession this year has also ticked up to 30% from 17% in October, the IMF said in its report.

Uncertainty over Mr. Trump’s trade policy is what’s driving the IMF’s projection of a U.S. economic slowdown. The international financial agency said trade was stable in 2024 and was expected to remain that way, but that the landscape changed in light of America’s tariff war with trade partners.

“This on its own is a major negative shock to growth,” an executive summary of the monetary fund’s report said. 

The IMF’s forecasts were finalized April 4, just after the Trump administration announced sweeping tariffs. The international agency warned that further escalating the trade war could stymie both near- and long-term growth.

The Associated Press

contributed to this report.

Mary Cunningham

Mary Cunningham is a reporter for CBS MoneyWatch. Before joining the business and finance vertical, she worked at “60 Minutes”, CBSNews.com, and CBS News 24/7 as part of the CBS News Associate Program.

DETROIT — President Donald Trump’s tariff blitz has sent shock waves throughout every aspect of the global economy, including the auto sector, where multi-billion-dollar plans to electrify in the United States are especially at risk.

Here’s what consumers should know about the impact of tariffs on electric vehicles.

EVs accounted for about 8% of new car sales in the U.S. in 2024, according to Motorintelligence.com.

Some of those sales can be attributed to expanded tax credits for EV purchases, a Biden-era policy that spurred car buyer interest.

Tesla held a majority of U.S. EV market share in 2024, at 48%. But that share has declined in recent years, as brands including Ford (7.5%), Chevrolet (5.2%) and Hyundai (4.7%) began to offer a wider variety of electric models at better price points, according to Kelley Blue Book.

Electric vehicles remain more expensive than their gasoline-powered equivalents. New gas vehicles sold for $48,039 on average last month, Kelly Blue Book data says, while EVs sold for $55,273 on average.

Tariffs add on to the costs of an EV transition that was already volatile and uncertain, said Vanessa Miller, a litigation partner focused on automotive manufacturing at law firm Foley & Lardner.

Biden’s tax credits essentially required automakers to get more and more of their EV content from the U.S. or trade allies over the coming years in order for their vehicles to qualify. Automakers have worked to build an EV supply chain across the country and significant investment has gone toward these efforts.

EVs assembled here include Tesla models, the Ford F-150 Lightning and more. Tesla actually might be least vulnerable given how much of its vehicles come from the U.S.

Though the industry is growing, tariffs mean costs for automakers and their buyers will stay high and might go higher, as well as hike up the prices of the many parts of EVs still coming from China and elsewhere. From the critical minerals used in battery production to the vehicles themselves, China laps the U.S. industry.

Automakers were already pulling back on ambitious electrification plans amid shrinking federal support and are strapped for cash on what is the less lucrative side of their businesses.

Higher prices might push car buyers to the used car market, but they aren’t likely to find much respite there.

If consumers don’t buy as many vehicles, automakers will have to prioritize their investments and manufacturing. That means the cars that buyers want and that are most profitable. Automakers still lose thousands of dollars on each EV they make and sell, but they make money from big, popular gas-guzzling pickup trucks and SUVs.

These manufacturers “have put a certain amount of investment into EVs, and it would probably be even more wasteful to completely walk away from them than it is to find the new level at which it makes sense to maintain production of them,” said Karl Brauer, executive analyst at auto research site iSeeCars.com. That level “will assuredly be lower than what it was,” he added.

Making fewer EVs won’t help bring their cost down further anytime soon.

Albert Gore, executive director of the Zero Emission Transportation Association, said in a statement the EV and battery sector is working to ensure that the American auto industry grows and that his group will work with the administration on productive trade policy.

“Tariffs on our longstanding trade partners, many of whom have committed billions in direct investment into U.S. factories, introduces uncertainty and risk into an industry that is creating jobs and bringing new economic opportunities to communities across the country,” Gore said.

Trump has already taken a hatchet to federal EV policy. He campaigned on a vow to end what he called former President Joe Biden’s “EV mandate.”

Biden’s EV policies did not require automakers to sell EVs or consumers to buy them, but they did incentivize manufacturers to increase their electric offerings in the coming years. Trump put an end to Biden’s target for 50% of all new vehicles sold in the U.S. to be electric by 2035 in his first days in office.

Also under Biden, Environmental Protection Agency and National Highway Traffic Safety Administration rules on vehicle greenhouse gas emissions and fuel economy were to get increasingly tougher, but could be met by automakers selling a growing number of EVs alongside more fuel-efficient gasoline-powered vehicles. Trump’s administrators are already reevaluating emissions standards.

He’s also likely to seek to repeal the tax credits.

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Alexa St. John is an Associated Press climate reporter. Follow her on X: @alexa_stjohn. Reach her at ast.john@ap.org.

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The Associated Press’ climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.

UNITED NATIONS — Sudan’s warring military and paramilitary forces are escalating attacks with outside powers “fueling the fire,” which is intensifying the nightmare of hunger and disease for millions, the United Nations chief said Monday.

Secretary-General Antonio Guterres warned the U.N. Security Council that the 18-month war faces the serious possibility of “igniting regional instability from the Sahel to the Horn of Africa to the Red Sea.”

In a grim report, Guterres said the Sudanese people are living through numerous “nightmares” – from killings and “unspeakable atrocities” including widespread rapes to fast-spreading diseases, mass ethnic violence, and 750,000 people facing “catastrophic food insecurity” and famine conditions in North Darfur displacement sites.

He singled out “ shocking reports of mass killings and sexual violence ” in villages in east-central Gezira province in recent days. The U.N. and a doctors’ group said paramilitary fighters ran riot in the region in a multi-day attack that killed more than 120 people in one town.

Sudan plunged into conflict in mid-April 2023, when long-simmering tensions between its military and paramilitary leaders broke out in the capital Khartoum and spread to other regions including western Darfur.

The war has killed more than 24,000 people so far, according to Armed Conflict Location and Event Data, a group monitoring the conflict since it started. It has created the world’s worst displacement crisis, with more than 11 million people fleeing their homes including 3 million to neighboring countries.

Guterres urged both sides to immediately agree to a cessation of hostilities, ensure the protection of civilians for which they bear primary responsibility, and enable humanitarian aid to flow to millions in need.

The secretary-general said he is “horrified” by reports that the paramilitary Rapid Support Forces, or RSF, continue to attack civilians in North Darfur’s capital El Fasher and surrounding areas, including displacement sites where famine has been confirmed.

“And I am also horrified by reports of attacks against civilians perpetrated by forces affiliated with the Sudanese Armed Forces in Khartoum, and by continuing mass civilian casualties due to apparently indiscriminate airstrikes in populated areas,” he said.

Guterres said those who violate international humanitarian law must be held accountable.

The war began four years after a pro-democracy uprising forced the military’s ouster of Sudan’s longtime dictator Omar al-Bashir which was followed by a short-lived transition to democracy.

It has been marked by atrocities such as mass rape and ethnicity-motivated killings. The United Nations and international rights groups say these acts amount to war crimes and crimes against humanity, particularly in the western region of Darfur, which has been facing a bitter onslaught by the RSF, which was born out of the Janjaweed.

Two decades ago, Darfur became synonymous with genocide and war crimes, particularly by the notorious Janjaweed Arab militias, against populations that identify as Central or East African. Up to 300,000 people were killed and 2.7 million were driven from their homes.

That legacy appears to have returned, with the International Criminal Court’s prosecutor, Karim Khan, saying in January there are grounds to believe both sides may be committing war crimes, crimes against humanity, or genocide in Darfur.